Archive for April, 2012

Covering the Sands Cotai Central opening on April 12 included attending the news conference with top executives of Sands China and its parent company Las Vegas Sands (LVS). That put me squarely in the sights of the billionaire chairman of both companies, Sheldon Adelson.

During the question and answer period, I introduced myself as Muhammad Cohen from Asia Times and Macau Business, then asked company executives whether they regretted their decision in the face of the 2008 credit crunch to continue building Marina Bay Sands in Singapore while mothballing Sands Cotai Central, initially slated to open in 2009. The Wall Street-led crisis drove LVS to the brink of bankruptcy, requiring a $2 billion lifeline from Adelson. Marina Bay Sands, which cost nearly $6 billion, has become the most profitable casino resort in the world in operating terms. With its delay, Sands Cotai Central has cost $4.4 billion, making it Macau’s most expensive resort to date.

LVS president and chief operating office Michael Leven explained that Marina Bay Sands was already fully financed before the crisis hit, while Sands Cotai Central was only partially funded, based on lenders preferences for the two projects. “I regret that we didn’t complete [Sands Cotai Central] two-and-a-half years ago, because Macau would now be further ahead,” Leven added. “We’re really happy to be able to open it today. This puts the exclamation point at the end of the sentence. It’s a game changer for MICE [meetings, incentives, conventions and exhibitions] in Macau.”

As I furiously scribbled what Leven had said, I heard Chairman Adelson say my name as he unloaded with both barrels.

“I’ve read what you’ve written, Muhammad, and it’s not true,” the 78 year old worth $24.9 billion said. “We didn’t take the money from Macau to Singapore. Not a single pataca, not a single penny went from here to Las Vegas, or from here to Singapore.”

There’s not much I could say in response to that kind of public shoot-down, particularly when it comes from the most powerful man in the global gaming industry, accompanied by his band of security guards. And especially since I never wrote what Adelson said I did.

The charge that LVS has used its Macau profits elsewhere has been raised. Macau Business made reference to that sentiment when it reported Adelson’s earlier “not one pataca” denial a couple of years ago, But I’ve certainly never written that LVS is taking money from Macau for projects elsewhere. The real issue, which neither Leven nor Adelson addressed, was the local political damage done. A lot of people remember that LVS continued work in Singapore while pausing in Cotai during Macau’s moment of crisis, the one time during the company’s Macau tenure when the city really needed the construction jobs and related commerce. Macau also presents a far more important long term opportunity than Singapore, where revenue growth has already shown signs of stagnation and government regulations restrict opportunities.

I spent the rest of Sands Cotai’s opening day basking my ill-gotten notoriety, refuting my culpability to all I met, from Sands China president and CEO Edward Tracy to analysts who suddenly recognized me. “At least he knows your name,” several consoled me.

Sipping champagne ahead of the black tie gala dinner (to which my invitation must have been lost), I managed to issue my denial to Dr Miriam Adelson, the chairman’s wife during the course of a delightful chat. I hope she passed the word to the next pillow.

Totally globalized native New Yorker and former broadcast news producer Muhammad Cohen is author of Hong Kong On Air, a novel set in his adopted hometown during the 1997 handover about television news, love, betrayal, financial crisis, and cheap lingerie. See his biography, online archive and more at www.muhammadcohen.com.

My report on Singapore’s decision to license two Malaysian junket promoters is in the April issue of Macau Business. Buy the magazine at fine news dealers throughout Macau and Hong Kong or look for it online at Macau Business Digital later this month, where every issue is archived.

I’m currently in Macau for the opening of Sands Cotai Central and will cover the event for Asia Times. I’ll post some further impressions here after that article is published.

Singapore Business Review also asked me to comment on the city-state’s initial licensed junket operators, or as Singapore’s Casino Regulatory Authority prefers International Marketing Agents (IMAs). The article was posted this week with my edited comments and those of other experts this week.

Here’s a full transcript of my comments to SBR:

“The decision to license two small junket promoters reminds me of Singapore bringing in the Crazy Horse topless show. It’s a way for the authorities to provide evidence that they’re willing to take risks through a virtually meaningless gesture.

What’s most revealing is that eight years after the authorities decided to embark on casino legalization and two years after the first casino opened its doors, with no licenses granted to junket promoters and thus no experience of seeing how junkets would operate in Singapore, the regulator thought that it needed to issue more stringent rules. That belies the common notion of Singapore as a well-run, transparent jurisdiction with smart people in charge.

Licensing more junkets would relieve the official schizophrenia over high rollers. On one hand, Singapore taxes their gaming revenue at 5 percent [vs 15 percent for mass market play], but on the other hand, it won’t license any agents to bring them to the casinos. Throughout Asia, junkets are an important part of attracting VIPs – casinos can’t duplicate junkets’ overseas outreach efforts and range of services. As veteran gaming consultant Mike Gore told me, “Junkets work hard for their money.” They know their market, they know their customers, and they speak their language. All of that matters.

Having more junkets doesn’t mean being less particular about who gets licensed, but it does mean doing the job faster and more efficiently. Right now, applicants need to supply vast amounts of information including a 40 page application form with no guarantee of a timely response. Surely, the government can do better than that.

The casinos have always been about bringing in foreign high rollers, so you’d hope the authorities would get more proactive about it. Rather than just sitting around waiting for applications and processing them at the glacial pace, why not reach out to honest businesses in related fields and encourage them to become IMAs. There may be some regulatory hurdles, but why not consider having junket promoters linked to overseas branches of DBS or Singapore Airlines? If you want an honest casino industry, then encourage honest companies to find ways to participate scrupulously and profitably.

For that same reason, Singapore should publish comprehensive gaming revenue statistics, as Macau does, to help other companies better understand what’s happening in the casinos and where the opportunities may be.”

Totally globalized native New Yorker and former broadcast news producer Muhammad Cohen is author of Hong Kong On Air, a novel set in his adopted hometown during the 1997 handover about television news, love, betrayal, financial crisis, and cheap lingerie. See his biography, online archive and more at www.muhammadcohen.com.